The Hindu : Tamil Nadu News : IT sector concerned at duty hike on packaged software

Online edition of India's National Newspaper
Friday, Mar 03, 2006

Tamil Nadu

Tamil Nadu

IT sector concerned at duty hike on packaged software

Special Correspondent

"It will directly increase the cost of competence, affecting the education sector and the common man"

CHENNAI: The Union budget has left the IT industry both buoyant and apprehensive. While industry players say the budget will help build upon the gains from the past, the increase in duty on packaged software has evoked concern.

"We are happy with the growth and consolidation [possibilities] which would ensure good continuity from the past. However, the newer duties on packaged or shrink-wrapped products and software is cause for concern, particularly where the impact on the domestic market is concerned," Lakshmi Narayanan, president and CEO, Cognizant Technology Solutions, said.

"While the emphasis on primary education and research and development will go a long way in sustaining the 8 percent plus GDP growth, the additional duties to be levied on packaged software will directly increase the cost of competence, as packaged software is used largely by educational institutions and the common man.

"With IT usage multiplying among end users, the purchasing power of computers and packaged software should ideally come down, but the additional duties seem to take it in another direction."

Prabal Basu Roy, executive vice-president and group chief financial officer, Polaris Software Lab Limited, said: "The budget signals a certain level of stability in policies and discipline in managing government expenditure."

Ranjit Pisharoty, convener of the IT/BPO panel of Confederation of Indian Industry-Tamil Nadu, said: "The fact that PCs and packaged software will cost more is a backward step as far as bridging the digital divide goes, especially when the government should be encouraging PC penetration to the lowest levels and when industry bodies such as the CII are trying to find ways for the small and unorganised sector to embrace IT systems."

He added: "It is disappointing that the crying need of the hour, for policy direction and infusion of plan funds has been given the go-by."

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